JCPenney weighing bankruptcy amid strategies to deal with coronavirus
A JCPenney department store logo at an abandoned shopping mall in Roanoke Rapids, North Carolina in August 2019. Photo: Andrew Caballero-Reynolds/AFP via Getty Images
JCPenney is weighing bankruptcy as one of its options to deal with the financial fallout of the coronavirus pandemic, Reuters first reported.
Catch up quick: The 118-year-old company — which holds nearly $4 billion in long-term debt — has temporarily furloughed 80,000 of its hourly store associates in response to the virus and closed its stores and offices.
- JCPenney announced Wednesday it would miss the due date on a $12 million interest payment, for which it has a 30-day grace period, per Fox Business.
What they're saying: "As a result of the pandemic, JCPenney made the strategic decision to not make an interest payment due on April 15th and take advantage of the 30-day grace period to continue ongoing discussions with lenders and maximize financial flexibility," company spokesperson Brooke Buchanan said in a statement.
- "JCPenney has been engaged in discussions with its lenders since mid-2019 to evaluate options to strengthen its balance sheet, a process that has become even more important as our stores have also closed due to the pandemic," Buchanan said.
- "The Company successfully met or exceeded guidance on all five financial objectives for 2019 and saw comparable store sales improvement in six of eight merchandise divisions in the second half of 2019 over the first half. We remain focused on our Plan for Renewal, and look forward to when we reopen our doors."
The bottom line: The company "has not made any final decisions on how to address its strained finances," Reuters reports, citing sources familiar, and is "considering asking creditors for breathing room through transactions that would rework debt outside of bankruptcy court proceedings."
Go deeper: The death of department stores